Maine's food producers struggle with how to manage and grow their businesses, find workers and deal with high costs like taxes and energy, according to a kickoff session in the Maine Startup & Create Week food track Monday.

In a survey of Maine food-related companies by Harvard University, the more-than 235 respondents cited those issues as their greatest challenges in being a food company in Maine, said Betsy Biemann, who is working with Harvard on a study of Maine's food businesses.

Biemann moderated the panel on "Making Maine a Great Place to Grow Food Companies" on Monday morning. She also is a former head of the Maine Technology Institute.

Biemann said the study found that companies have challenges with financing and positioning themselves against their competitors. They also have trouble finding workers, along with supply chain issues. And, energy costs and taxes are high.

"Half of the companies didn't want to grow, but wanted to be more profitable," she said. "Another 30% wanted to grow in line with the industry, and 20% wanted to grow aggressively."

The full report from Harvard is due out this summer.

Home-grown malt

Panelist Joel Alex, who founded Blue Ox Malthouse of Lisbon Falls, personifies some of the difficulties. He is working with farmers to produce malting grain and keep it in the state rather than having most of it exported to Canada, then reimported by Maine brewers.

A home brewer who wanted to help grow Maine's rural economy, Alex lived out of his car for 18 months, relying on the kindness of family and friends to get his business up and running. He expects to start commercial production at the end of the summer.

He also used the Small Business Development Center in Fairfield to get early counseling on his business, received an MTI Tech Start grant to get statistics about the Maine malt business, and had other grants including from the Maine Grain Alliance. He also used Maine Center for Entrepreneurial Development's Top Gun Prep and other programs in the state for startups.

Since Alex won't get premium prices for his malt, which is considered a commodity and won't be sold directly to consumers, he said he needs to scale his business quickly.

But Alex noted that beer used to be a commodity, and craft brewers have elevated it to the point where they can sell a product that is high quality and unique.

"They need more and different unique products," he said, referring to the malts he plans to produce for craft brewers. "The glow of the local movement will help us."

Right now, the Lisbon Falls factory is 7,500 square feet. He's ordered all the equipment he needs, and says the factory will be filled to capacity when he starts production.

"Our infrastructure and supply chain will allow us to grow," he said.

Reaching out

Aaron Anker, CEO of GrandyOats, which later this fall will move from Brownfield into a former schoolhouse in Hiram, related to some of the startup issues Alex faced. His company, which was started in 1979 and bought by his business partner in 1997, relied on good timing to get its products on the shelves in Hannaford and Whole Foods supermarkets, as well as getting advice from others. But it also had bad debt in its 10th year, and got a good financing partner in Bangor Savings Bank.

"[Tom's of Maine founder] Tom Chappell taught me to 'seek counsel,'" Anker said. He networked, took an entrepreneur course at the University of Maine and joined the boards of several groups like the Maine Food Producers Alliance, now part of the Maine Grocers & Food Producers Association.

The granola company now competes squarely against much larger national companies, as previously reported by Mainebiz. Anker said company sales of $115,000 in 2000 have grown to $5 million now.

"Maine is a fantastic place to grow a business," Anker said. "People are very approachable." He said he's met governors and state representatives without having to pay thousands of dollars for a seat at a special event table.

The company is on a roll. Anker said it just signed a deal with Boston University for 16,000 pounds of Maine-grown oats. "Unfortunately, they make their own granola in their kitchen," he added. "I like the university space now. University students are demanding healthier foods. We're growing substantially in the food service channel now."